The behavior of the real interest rate in a general equilibriummultisector model with irreversible investment is examined. It isshown that in such a model purely sectoral shocks can lead tosubstantial variation in the real interest rate and other aggregatetime series. A source of variation in aggregate time seriesthat is not found in one-sector models is thus examined, and theimplications of this source of variation for the behavior of theinterest rate are highlighted. Such a model seems to better capture therelationship among the real interest and output or investment thanthe standard one-sector stochastic growth model. It is also shownthat, because of a desire to smooth consumption, with irreversibleinvestment a rise in uncertainty concerning the future return tocapital tends to lead to more current investment and a lowerreal interest rate.